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SA: Mpahlwa: Programme of Action media briefing Economic, Investment and Employment Cluster November 2007 (06/11/2007)

6th November 2007


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Date: 06/11/2007
Source: Department of Trade and Industry
Title: SA: Mpahlwa: Programme of Action media briefing Economic, Investment and Employment Cluster November 2007

Media Briefing on the Economic, Investment and Employment Cluster's Programme of Action (Cycle Four Report) by the Honourable Minister of Trade and Industry, Mandisi Mpahlwa



As with previous media briefings held this year, this report will focus on progress made in the three strategic areas that comprise the Economic Cluster's programme of action, namely

* to increase economic efficiencies,;
* to promote dynamic growth sectors through the implementation of our industrial policy;
* to ensure we offer integrated service to assist small- and micro-enterprises


In this report we will also report on the Apex priority projects which the July 2007 Cabinet Lekgotla allocated to the Economic Cluster.

1. Increase economic efficiencies

The work on increasing economic efficiencies focuses on three key network industries: energy, information and communication technology (ICT) and public transport.

In January 2007 Cabinet agreed that energy had to be one of the major strategic issues for the Cluster.

There are three components to our approach; monitoring supply and demand, the provision of energy infrastructure and leveraging expenditure to promote industrial development.

In terms of managing energy demand and supply, we are monitoring supply and demand and looking at ways to manage energy demand in the short term. The multimedia energy efficiency campaign has been completed and a report on energy efficiency in the public sector will be completed this month. As part of this work DEAT will be monitoring air quality.

Further to this, there is a need to implement measures to achieve renewable energy targets with a view to reducing our dependence on coal-fired power stations and imported fuels. This will include measures to achieve renewable energy targets. In this regard the biofuel strategy has been finalised by an inter-ministerial committee that has suggested changes to our biofuels strategy which will now be submitted to Cabinet for consideration.

Regarding energy infrastructure, we have previously reported on the rollout of further capacity focused mainly on Eskom's R150 billion built programme. This work remains on track. In addition, the work on the Pebble Bed Modular Reactor initiative continues.

On the industrial development dimension of the energy infrastructure roll-out the work on the Competitive Supplier Development Programmes continues with Eskom anticipated to implement its development plans by March 2008 and PBMR by July 2008.

Vital to our work in this area is the Intsimbi Programme, an all-encompassing turnaround strategy for the tool-, die-, mould, jig, fixture, mining tooling and related precision machining products manufacturing industry.

The Electronic Communications Act (ECA) amendment has been gazetted for public comment and will be debated in Parliament with a view to finalising it this month. The amendment is aimed at facilitating government's intervention in respect of investments in strategic ICT infrastructure.

On increasing access to ICT infrastructure, Department of Communications and National Treasury, are at an advanced stage of finalising the plan to capitalise Sentech. Capitalisation of Sentech will enable the provision of wireless government services to communities. The investment into submarine cable is crucial to connect Africa to European countries and assist in driving down international connectivity costs for Africa. In this regard, draft guidelines setting out the parameters for the landing of submarine cables will be gazetted by the end of this month.

Competition is vital to increasing economic efficiencies and growth. In this regard our work focuses on a review of import tariffs and Competition Policy. With regard to promoting competition in upstream industries, import tariffs on carbon and stainless steel have been removed and a review of intermediate tariffs in other sectors, namely paper and pulp, chemicals and aluminium has begun. The Competition Policy review and draft amendments have been finalised and will shortly be considered by Cabinet.

We are looking at resolving organisational issues with respect to skills development and a draft review report on SETAs has been tabled by the Department of Labour at the National Economic Development and Labour Council (Nedlac). This work is being undertaken as part of the revised National Human Resource Development Strategy (NHRDS) approved by Cabinet in July 2007.

2. Implementing the National Industrial Policy Framework (NIPF)

The Cluster is implementing the Industrial Policy Action Plan focusing on the four lead sectors; chemicals and pharmaceuticals, automotives, pulp and paper forestry and furniture and capital equipment, metals and transport equipment as well as clothing and textiles. As part of this, Key Action Plans in sectors such as clothing and textile; metals and engineering and capital equipment have been completed. However, we are not simply waiting for the finalisation of sector plans but are implementing plans where they are ready. For example, government is implementing the tooling initiative in the capital goods sector.

In terms of chemicals and pharmaceuticals the review of input tariffs is underway. Nedlac is also considering a strategy to increase domestic fabrication of pharmaceuticals.

In terms of clothing and textiles, we are implementing measures to recapture and stabilise the domestic market. Measures include a review of import duties of key inputs into the clothing sector; fast tracking the development of an alternative support mechanism to the existing Duty Credit Certificate Scheme in collaboration with the IDC; the design of a customised industrial upgrading programme for a sector to ensure sustainability and the creation of a textiles engineering centre of excellence.

Ongoing implementation of key action plans continues in Business Process Outsourcing (BPO) and Tourism. In BPO, the Government Assistance and Support Programme (GAS) for the development of the sector has approved six applications with an approximate investment of R500 million that will create about 9 000 jobs over the next three years. To support the BPO sector, a discounted telecommunication pricing model for the BPO operators has been completed and the Department of Communication will soon make a statement in this regard.

On the tourism sector, an implementation framework for the tourism Second Economy has been developed as part of the tourism development programme. Through the Tourism Enterprise Programme 993 small, medium and micro enterprises (SMMEs) were provided with support ranging from business linkages to the development of business or marketing plans.

In terms of the investment call centre, which is to service investors who are investing over R100 million, pre-feasibility for the establishment of the call centre and costing of the project have been completed. Proposals for the call centre will be evaluated in November 2007.

For industrial policy to be successfully implemented we will require appropriate industrial financing instruments. We are in the process of developing specific instruments for sectors as well as key generic instruments such as our re-formulated Small and Medium Enterprise Development Programme (SMEDP), the Enterprise Growth Programme. We are engaging National Treasury on developing these instruments of industrial policy.

3. Integrate small- and micro-enterprise service delivery

The implementation of the Integrated Small Enterprise Development Strategy is underway and significant progress can be reported.

The service delivery network integrating both financial and non-financial support has been extended. On creating a national service delivery network, there are 47 Small Enterprise development Agency (seda) offices and 103 Enterprise Information Centres have been established.

13 Retail Finance partners through which Khula lends and 13 Khula Mentorship Offices have been established.

On increasing access to finance, South African Micro-finance Apex Fund (SAMAF) partner organisations have increased from 39 to 41 and approximately 18 500 clients have been funded since the launch of the fund in April 2006. To leverage the Financial Services Charter R5 billion commitment, Khula and the top four commercial banks have agreed to a revised Credit Indemnity Scheme that will boost access to finance for small enterprises. In addition, the Industrial Development Corporation (IDC) in the 2006/07 financial year allocated R597 million to businesses operating in or near townships, and the IDC Risk Capital Facility has allocated R190 million to 90 companies creating 5 310 jobs.

Part of the work of promoting SMMEs is to improve demand side measures for small enterprises. In this regard we will be making announcements on these issues soon.

In terms of accelerating land and agrarian reform an implementation plan on land and agrarian reform has been finalised in line with the Provincial Growth and Development Strategies and Integrated Development Plans.


The Cluster has made significant progress but there are still challenges that exist in fast-tracking implementation in certain areas. More efforts will be required to ensure that items with December 2007 deadlines are completed on time for consideration by Cabinet at the January 2008 Lekgotla.

Issued by: Department of Trade and Industry
6 November 2007



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